Oops! Card Declined

It happens. Something went wrong when you were trying to buy something online. Using your credit card or debit card to make an online purchase is a two-step process consisting of an authorization and a settlement.

• The most common reason a transaction fails is when the name on the card, the billing address, the zip code, and the 3-digit code do not all match during the verification process. This is called an AVS mismatch. Merchants typically have little to no control over how or why a card is approved or declined.
• Another common mistake is simple typing errors. Check your spelling and make sure you did not transpose numbers.
• Make sure that the billing address matches the card you are using. Many times people have a billing address for work and one for home. If you used your "home" credit card with your "work" billing address, your card will be declined.

What to do next...

Make sure that the address you have entered is actually the billing address. If you are completely, absolutely, positively certain that you entered everything correctly, you should contact your bank and have them investigate the issue. There are other errors, of course, such as transposing zip code numbers, entering the security code incorrectly, and more.

If your card is not approved, we recommend you contact your credit card company or bank to report you encountered an AVS mismatch error during your transaction attempt.

What not to do...

Do not try more than two times to enter your credit card information. When you make an online purchase, your transaction is encrypted and sent over a secure line to a payment gateway which verifies that your account is valid and that sufficient funds are available to cover the transaction's cost. At this step, the funds are "held" and deducted from your credit limit (or bank balance, in the case of a debit card) but are not yet transferred to the merchant.

At the end of the day, the merchant submits the finalized transactions to the acquirer in a "batch transfer," which begins the settlement process, where the funds are transferred from the customer's accounts to the merchant's accounts.

Learn More...The Long Version of the Story

An authorization hold is the practice within the banking industry of authorizing electronic transactions done with a debit card or credit card and holding this balance as unavailable either until the merchant clears the transaction (also called the settlement), or the hold "falls off." In the case of debit cards, authorization holds can fall off the account (thus rendering the balance available again) anywhere from 1–5 days after the transaction date depending on the bank's policy; in the case of credit cards, holds may last as long as 14 days, depending on the issuing bank's policies.

When you make an online purchase, your transaction is encrypted and sent over a secure line to a payment gateway which verifies that your account is valid and that sufficient funds are available to cover the transaction's cost. At this step, the funds are "held" and deducted from your credit limit (or bank balance, in the case of a debit card) but are not yet transferred to the merchant. At the end of the day, the merchant submits the finalized transactions to the acquirer in a "batch transfer," which begins the settlement process, where the funds are transferred from the customer's accounts to the merchant's accounts. Contrary to popular belief, this process is not instantaneous: the transaction may not appear on the customer's statement or online account activity for one to two days, and it can take up to three days for funds to be deposited in the merchant's account.

For example, if an individual has a credit limit of $100 and uses a credit card to make a purchase at a retail store for $30, then his available credit will immediately decrease to $70. This is because the merchant has obtained an authorization from the individual's bank by swiping the card through its credit card terminal. If the billing statement was sent out at that point, the actual charges would still be $0, because the merchant has not actually collected the funds in question. The actual charge is not put through until the merchant submits their batch of transactions and the banking system transfers the funds.

When viewing an online banking website, authorization holds often appear in the "pending transactions" section of the balance sheet. As stated above, authorization holds only last for a fixed maximum period of time. So, if an individual made the $30 purchase listed above, and their bank only kept that authorization hold in place for 1 business day, then the individual would see the funds as a pending transaction for that first day. If the merchant failed to present the item for payment within that first day, the authorization hold would "fall off" and the funds would appear to be available again. If the merchant then presented the item for payment 2 days later, the $30 transaction would "reappear" and actually be debited from the account at that time. This causes some issues with overdraft fees, as customers who rely solely on the online (or ATM) balance may not be taking into account transactions for which the authorization hold has fallen off. This creates a false impression of the balance, and can cause the customer to spend more than they actually have in the account.

Where customers get surprised is when a credit card is declined. This most common reason a transaction fails is when the name on the card, the billing address, the zip code, and the 3-digit code do not all match during the verification process. Merchants typically have little to no control over how or why a card is approved or declined. Even when a transaction is declined, the authorization hold is still deducted from your available balance for a period of time before being replaced.